FTSE opened on the front foot on Tuesday with a gain of almost 3% to 5,129 points as the UK joined global stock markets higher following more stimulus from the US Federal Reserve and strong trading in Asia.

Oil and mining shares led the market advance with defensive sectors such as utilities and consumer staples taking a back seat .

Japan’s Nikkei 225 index was up 7.7% and China’s SSE index gained almost 2% while the Sydney ASX was up 4%.

Commodities were relatively quiet with Brent Crude down 0.4% at $27.4 and gold nudged up 1% to $1,583. Meanwhile the pound traded 0.5% higher against the US dollar at $1.16.

Athleticwear chain JD Sports Fashion (JD.) announced it had closed all its stores across the UK, Europe and the US to conform to government lock-downs that at this time of year would normally be expected to ‘contribute substantially all of the group’s physical store sales.’

Trading across the websites is providing some mitigating effects and the group is taking measures to conserve ‘cash burn.’

However, given the financial uncertainty the company is delaying the publication of its accounts for the period to 1 February, due to be released on 15 April. The shares rallied 7% to 389p.

Miniatures games company Games Workshop (GAW) gave a brief trading update in relation to the coronavirus, confirming it has closed all stores as well as warehouses and headquarters in response to the outbreak.

Sales performance has been impacted since March, but the company offered no further financial assessment at this stage. The shares dipped 0.5% to £42.7.

One bright spot in the emerging economic crisis was a trading update from gambling firm 888 Holdings (888), which said trading year-to-date was around 18% above last year.

The company experienced healthy trading in the sports and casino verticals, up 24% on the prior year. Against that was the effect of the cancellation of a number of sporting events, representing 16% of group revenues. The shares advanced 30% to 108p.

DIVIDEND CUTS

Home furnishings firm Dunelm (DNLM) cancelled its interim dividend and has taken action to preserve cash by cutting capital expenditure and non-essential operating costs.

The company has a net cash position of £11m having drawn £14m from a £165m credit facility and said it expects to satisfy its covenant requirements at the FY20 year-end. The shares fell 5% to 630p.

Cellular materials company Zotefoams (ZTF) cut its dividend and said its priority was focused on ‘cash and cost management actions that are prudent, but also ensure the Group is well placed to benefit when market conditions recover.’

The company’s banks have increased short-term debt facilities to give it more headroom while it takes actions to address current market conditions. The shares rose 0.6% to 203.7p.

Home builder Redrow (RDW) said it had cancelled its interim dividend amid expectations its sales rate would be 'seriously impaired' over the coming weeks. The company had intended to pay an interim dividend of 10.5p per share.

Trading was 'resilient' in the first 12 weeks of the second half to 20 March, with the value of net reservations up £121m at £525m compared to last year. The shares were up 3% to 349p.

Legal and professional services group Gateley Holdings (GTLY:AIM) said it would be prudent for all stakeholders to maximise short-term liquidity, therefore it cancelled the interim dividend of 2.9p due to be paid on 21 March. The shares were unchanged at 122.5p.

Digital learning technologies company Learning Technologies (LTG:AIM) said it has taken proactive measures to prioritise the strong liquidity and net cash position of the Group and to follow WHO and government guidance to protect the safety of its workforce, customers and partners.

The final dividend 0f 0.5p was postponed in light of the current uncertainty. The shares rallied 3% to 112.5p.

 

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Issue Date: 24 Mar 2020